2017 (3) TMI 936 - AT - Service Tax

Public Relation Service - The respondent executed an agreement dated 31.03.2008 with the Govt. of AP (Information and Public Relation Department) (IPRD) for providing Integrated Mobile Publicity in Assembly Constituencies IMPACT ) through Mobile Publicity Vehicles - whether the above servce comes under the head Public Relation Service or not? - demand - Held that - the services have been provided to AP Govt. From a reference to the various activities illustrated in section 65(86c), the activities undertaken are to be considered as public relations - The definition makes it amply clear that the scope of tax is not limited to management of public relations. The use of the phrases in relation to and in any manner widens the scope of the taxability with reference to public relations - IPRD has prepared the overall plan to be implemented. However, for carrying-out the plan, the respondent is required to plan and organize the logistic support required in terms of the hardware as well as the experienced persons to carry-out the activities. When this is to be done on a state-wise basis, this will require considerable planning and management of the whole exercise. In our view this is to be considered as management of the public relations campaign. The activity would fall within the definition of public relation services in terms of the work carried-out by the respondent as seen from the terms and conditions of the contract entered into with IPRD. The services also do not fall under any category mentioned in general exemptions - demand upheld - appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Whether the service rendered falls under "Public Relation Service" for levy of service tax?
2. Whether the activities undertaken by the respondent constitute "management" of public relations?
3. Whether the respondent is liable to pay service tax, interest, and penalty for the services provided to the Government?

Analysis:
1. The appeal was against the dropping of a service tax demand of ?3,06,78,267 by the Commissioner concerning an agreement for Integrated Mobile Publicity in Assembly Constituencies. The respondent provided services through Publicity Mobile Vans, screening movies and advertisements. The department viewed it as falling under "Public Relation Service" and issued a show cause notice. The adjudicating authority dropped the proceedings, stating the activities were not public relations management. The respondent argued that they merely executed instructions and were not involved in management. The tribunal disagreed, citing the broad scope of public relations services under the Act.

2. The tribunal analyzed the definition of "Public Relations" under section 65(86c) of the Act, emphasizing that management includes guiding, directing, and executing work. The tribunal found that the respondent was entrusted with implementing the public relations program of the Government, indicating a management role. The respondent's argument that they only provided infrastructure was rejected, as managing public relations involves planning and organizing activities, which the respondent did on a state-wise basis. Therefore, the tribunal concluded that the respondent's activities constituted management of the public relations campaign.

3. The tribunal held that the respondent's activities fell within the definition of public relations services based on the contract terms with the Government. Despite being registered under advertising agency services, the respondent failed to include the amount received from the Government for service tax. The tribunal confirmed the liability for service tax, interest under section 75 of the Act, and imposed penalties as proposed in the show cause notice. Consequently, the appeal by the revenue was allowed, and the respondent's objections were disposed of.